$4.5 billion in loan debt owed by former Ashford University students wiped from books

DIXON – Thousands of borrowers who sought college degrees from a for-profit, largely online university that had a Clinton, Iowa, campus no longer will have to repay their student loans as the result of action taken by the Biden-Harris Administration.

Under that action, 261,000 borrowers who attended Ashford University from March 1, 2009, through April 30, 2020, will be relieved of $4.5 billion in student loan debt, according to a news release issued Wednesday by the U.S. Department of Education.

“Numerous federal and state investigations have documented the deceptive recruiting tactics frequently used by Ashford University,” said U.S. Under Secretary of Education James Kvaal. “In reality, 90% of Ashford students never graduated, and the few who did were often left with large debts and low incomes. Today’s announcement will finally provide relief to many students who were harmed by Ashford’s illegal actions.”

The loan forgiveness is in response to a request from the California Department of Justice based upon evidence it obtained during a successful lawsuit brought against Ashford University LLC and its parent company, Zovio, Inc. around widespread misrepresentations in nine separate areas, including students’ ability to obtain needed licensure, transfer credits, the cost and amount of financial aid, and the time it would take to earn a degree. The U.S. Department of Education also conducted its own separate review of the evidence from California, according to the release.

Zovio, formerly known as Bridgepoint Education, established its connection to Clinton when in 2005 it purchased the former Mount St. Clare College – which had been founded by Clinton’s Sisters of St. Francis in 1918 – turned it into Ashford University and gave the largely online institution a brick-and-mortar presence.

In the years that followed, Ashford, which at one point had nearly 100,000 students, came under scrutiny for its recruitment practices and former students' claims that they couldn’t transfer credits as promised or were unable to land a job after earning a degree from Ashford. Ashford’s Clinton campus closed in 2016. Bridgepoint later changed is name to Zovio, which dissolved in 2022, and Ashford became part of the University of Arizona Global Campus.

Also in 2022, the California Department of Justice secured a more than $20 million penalty against Zovio and Ashford, and an appeals court upheld the findings of wrongdoing and made a small reduction in the penalty in 2024.

The judge’s verdict found that Zovio and Ashford “created a high pressure culture in admissions that prioritized enrollment numbers over compliance.”

“Ashford University made false promises to students about the value of an Ashford degree and the opportunities it would create and instead left students worse off: with mounting debt and searching for a job,” said California Attorney General Rob Bonta. “This is unacceptable and illegal. California stopped this fraud when we sued Ashford and held it accountable for its deception. I am proud that California’s work taking this case to trial paved the way for the U.S. Department of Education to provide relief today for the hundreds of thousands of Americans who were deceived by Ashford.”

In addition to the California case, Ashford faced numerous lawsuits and investigations at the federal and state level, including from the Department’s Inspector General, the Securities and Exchange Commission, the Consumer Financial Protection Bureau, the U.S. Department of Justice, and the Attorneys General of Iowa and North Carolina. Some of these actions resulted in settlements, including one with the CFPB requiring Ashford to discharge private loans and pay an $8 million civil penalty.

In 2023 the Department announced the approval of $72 million in borrower defense to repayment discharges for more than 2,300 students who applied for relief from loans they took out to attend Ashford. The discharge announced Wednesday expands on that relief to cover additional borrowers.

According to the release, those prior approvals as well as the group discharge announced Wednesday result from the following misrepresentations:

• Ashford recruiters told students they would be able to work as teachers, social workers, nurses, or drug and alcohol counselors. But Ashford never obtained the necessary state approval and/or accreditation for students to enter these professions, meaning students wasted years of their lives and incurred tens of thousands of dollars of debt for degrees they could not use.
• Ashford recruiters also lied about the cost to attend Ashford, the amount and type of financial aid students would receive, and the amount of debt students would accumulate. For instance, before they had access to borrowers’ financial aid award information some recruiters told prospective students that they would not incur out-of-pocket costs, that every Ashford student qualified for federal Pell grants, or that loan payments would be $50–$75 per month. Borrowers later discovered these promises were untrue when, for example, they unexpectedly reached lifetime loan limits during their enrollment, unexpectedly incurred out-of-pocket costs, and were forced to withdraw with debt but no degree.
• Ashford recruiters misled students about how long it would take to obtain an Ashford degree by stating its bachelor’s programs were “accelerated” or by comparing Ashford’s bachelor’s programs to traditional four-year schools when, in fact, Ashford’s bachelor’s degree programs were structured to take five academic years to complete.
• Ashford recruiters misled students about the ability to transfer credits both into Ashford and out of Ashford. Recruiters told students that Ashford would accept previously earned credits, reducing the amount of time and money students would spend completing their degrees. Students would later learn only some of the promised credits actually transferred. Ashford recruiters also promised students that the credits they earned at Ashford would transfer to other universities, when this was not always true.

The release also states that only 10% of students graduated from Ashford within 8 years of enrolling and borrowers in their applications described the inability to obtain employment. Data released as part of the rulemaking on financial value transparency and gainful employment also show that Ashford had the second highest number of graduates in programs that failed to provide sufficient financial value. This includes failing to provide sufficient financial value in programs tied to misrepresentations in the California case, such as teaching, social work and psychology.

Separate from the action announced Wednesday, the U.S. Department of Education also announced that it has issued a proposed debarment action to Andrew Clark, the founder, president and CEO of Zovio. This would stop him from acting as a principal or executive of any institution in connection with the Title IV Program, among other consequences.

The U.S. Department of Education will refer this matter to its Office of Hearings and Appeals for a decision on whether to debar Clark and if so, for what length of time, according to the release. The department is recommending a debarment period of no less than three years. Clark has the opportunity to contest the proposed debarment, and the Office of Hearings and Appeals will decide whether and for how long a debarment should be effective.

What’s next for borrowers?

Ashford borrowers approved for a discharge will be sent emails from the U.S. Department of Education in the coming days notifying them that the full amount of outstanding balances for their Ashford loans will be discharged.

Borrowers will not need to take any further action to receive relief nor will they have to make any additional payments on these loans, according to the release. The discharge covers borrowers even if they have not submitted a borrower defense to repayment application.